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Limited Arbitrage and Enterprise’s Market Value

《南京理工大学学报》(自然科学版)[ISSN:1005-9830/CN:32-1397/N]

Issue:
2005年06期
Page:
755-758
Research Field:
Publishing date:

Info

Title:
Limited Arbitrage and Enterprise’s Market Value
Author(s):
RAN Sheng-xin
Business School,East China Normal University,Shanghai 200062,China
Keywords:
limited arbitrage market value capital structure credit constraint interest rate different ial
PACS:
F830
DOI:
-
Abstract:
Based on the limited arbitrage theory and the assumpt ion that the investors are confronted with credit constraints or interest rate differential, this paper studies the relationship between enterprise‘s capital structure and its market value by means of analyzing the investors. limited arbitrage behavior. The conclusion is that , even if the other conditions of MM Theorem 1 are not changed when the investors are confronted with credit constraints or interest rate differential, the enterprise’ s capital structure can also affect its market value, that is, the leverage enterprise. market value is often higher than that of others. Furthermore, with the enterprises. leverage rat io increasing, their bankrupt risk rises because of the investors. limited arbitrage.

References:

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Memo

Memo:
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Last Update: 2013-03-03